U.S. Farm Groups Pile on Canada as Trump Eyes Trade Fairness

Fog shrouds the Tyson slaughterhouse in Burbank, Washington December 26, 2013. Picture taken December 26, 2013.

Photo by REUTERS/Ross Courtney

U.S. President Donald Trump's criticism of the protected Canadian dairy system has emboldened American farm groups to tackle other longstanding agriculture irritants, as the countries move toward rewriting trade rules.

U.S. poultry exporters, who include Tyson Foods Inc and Pilgrims Pride Corp, as well as egg sellers, are expected to seek greater access to Canada's tightly controlled market in renegotiations of the North American Free Trade Agreement (NAFTA).

The United States, the world's second-biggest chicken exporter, will demand market access gains at least equal to those they would have realized under the failed Trans-Pacific Partnership (TPP) deal, industry groups and experts say.

U.S. farmers also want changes to Canadian grain laws that automatically assign the lowest price for their wheat.

"Anybody who has an issue with Canada, this is the time to bring it up now," said Dan Ujczo, an international trade lawyer with U.S.-based law firm Dickinson Wright. "The dairy issue certainly signaled that."

Trump last month took a swipe at Canada's dairy system, which prevents large-scale imports through steep tariffs, and moved to impose tariffs on Canadian lumber.

U.S. farm groups with grievances took note.

"It's unfair for the dairy industry but it's unfair for poultry and eggs as well," Jim Sumner, president of the U.S. Poultry & Egg Export Council (USAPEEC), said on Tuesday, adding he plans to make that point with the U.S. administration.

Canada currently allows tariff-free egg imports amounting to 2.98 percent of Canadian production, and chicken imports worth 7.5 percent. Imports would have doubled for eggs and jumped by more than one-quarter for chicken under TPP.

"I'd be surprised if (the U.S.) starting point was anything less," said Ontario egg producer Roger Pelissero, chairman of Egg Farmers of Canada.

Last year, U.S. poultry sales to Canada totaled $509 million, while American egg and egg product exports to Canada amounted to $46 million, according to USAPEEC.

Giving up expanded access is a real risk, said Robin Horel, chief executive of Canadian Poultry and Egg Processors Council, whose members include Maple Leaf Foods Inc and Cargill Ltd. But the industry will emphasize that despite restrictions, Canada imports more chicken, turkey and eggs from the United States than vice-versa, he said.

Wheat Unfairness?

Meanwhile, in the northern U.S. plains, farmers aim to use NAFTA renegotiations to open wheat sales opportunities.

Under Canadian legislation, U.S. wheat automatically receives the lowest quality grade and price in Canada, while Canadian wheat commands the price accorded to its quality in the United States.

The result is that U.S. farms near the border have no reason to truck grain to Canadian companies that may be closer, while plenty of Canadian wheat flows south to American delivery points, said Alan Merrill, president of Montana Farmers Union.

"It's just solid (lineups of) Canadian trucks, coming down with grain," said Merrill.

Alternatively, U.S. farmers can negotiate price based on the wheat's specifications, said Guy Gallant, a spokesman for Canadian Agriculture Minister Lawrence MacAulay. The vast majority of buying by Canadian grain companies, however, is done based on the country's grading system.

Farmer group Western Canadian Wheat Growers Association urged Ottawa last week to change the law to make cross-border wheat trade more fair, and avoid a trade dispute.